Car insurance is a cut throat business so insurers use a
number of methods to increase their profits at your expense. Some of these
are legitimate, some dubious and others downright dishonest. These are some
tricks to look out for:

Poor service, premium phone number

You buy a cheap policy, pay the premium and straight away
run into problems. Perhaps your documents don't arrive, there are mistakes
in them, or you are asked to provide more details. The problem is: your
emails are not answered and the only way you can contact the company is via
a premium rate phone call which costs a pound a minute or more. You ring
only to be met by a pre-recorded message that seems to go on for ever. You
finally speak to a real person who promises to look into it, puts you on
hold, and a few minutes later the phone goes dead leaving you no option but
to repeat the process (at over a pound a minute) only to eventually speak to
a completely different person, which means you have to start all over again
. You've been had, just like thousands of other UK motorist.

Cancelled policies

This often runs in conjunction with the trick above. You buy
your policy and a few days later you get a letter demanding absolute proof
of the no claims bonus you've claimed, and a copy of your driving licence
(or even the licence itself). You are given just a few days to send these,
otherwise your policy will be cancelled and a cancellation charge (typically
£75) will be levied. You may not be able to find these, you may not be able
to get copies quickly, you may send them only for them to get 'lost in the
post'. Or you may simply be on holiday and unaware of the matter. You can't
contact the company without using the premium phone number and even if you
do you are taken round in circles. Very soon you get a letter telling you
that your cover has been withdrawn and they are keeping £75 of your money;
hopefully you have not been prosecuted for unwittingly driving without
insurance, or involved in an uninsured accident in the meanwhile. You may,
or may not, get back the balance of the premium you paid without a struggle.
Good business for your insurer since £75 is a lot more than they can expect
to make from the commission on your original policy.

Add-Ons

The premium you pay rarely makes much profit for the broker.
For most of them the big money comes from add-ons such as guaranteed
courtesy car (what? You thought you'd already bought that? Read the small
print - it's not actually guaranteed); legal representation in the event of
an accident or prosecution; breakdown cover etc. The problem is that these
often represent very poor value for money and provide large profits to your
insurer.

Often the pill is sweetened; you'll be offered a huge discount which makes
it a more attractive proposition. What you are not told is that these extras
will be automatically included in subsequent renewals - at the regular (ie
inflated) prices. Many companies make far more from these than from the
policy premium itself.

Protected No Claims Bonus

You buy one of these, thinking that if you have an accident
your premium won't rise. You then have a slight bump but no problem, it's
protected isn't it? It comes as a shock when your next renewal arrives with
a vastly increased premium, which will be automatically debited from your
credit card in 14 days or so (what, you don't remember agreeing to automatic
renewal? You should have read the small print).

What went wrong? Well, the insurer promised you no reduction in your NCB and
that was correct. If it was 60%, it stays 60%. However, the premium that it
is based on is a different matter. It has shot up because of the accident.
You pay a lot more, even though you thought the bill would stay the same.
Did they tell you this? No, I thought not.

Mid Term Alterations

You change your job, change your car, move to a new address,
increase your mileage, get a part time job, start night shifts. These and
many other alterations have to be referred to your insurer, failing which
they could have grounds for refusing a claim. The actual underwriter may, or
may not, request an extra premium; the broker (most 'insurance companies'
are actually brokers) can decide on whether or not to charge a fee for
changing their records. Some major companies charge nothing at all because
they have a reputation to protect; certain others extract an extortionate
fee (we have seen cases where over £100 has been demanded) just for a little
minor clerical work). As always they have the right to do this, buried in
their terms and conditions.

Avoiding getting stung

Treat every policy you are offered with suspicion. Check the
Internet for reviews of the company you're thinking of dealing with and read
through their policy documents (by law they have to make these easy to find
and understand). Be particularly careful with offshore companies in
jurisdictions such as the Channel Islands, Bermuda or Gibraltar. Many, if
not most of them, do not come under the authority of the
Financial
Ombudsman service, which is obligatory for UK registered companies.
There are of course a lot of fine, upstanding and ethical insurers in these
regions but some are no better than they should be, and have you ever tried
to sue a company in a foreign court?

Getting your own back

Most people who have been ripped off complain to their
friends or post abusive reviews online but eventually take it no further.
This is a pity because it encourages the insurance sharks to keep on biting
trusting motorists.

Every insurance company that operates in the UK has to be authorised and
regulated by the Financial
Conduct Authority; a watchdog with real teeth. If you have a genuine
complaint about an insurer they will look into the matter for you. Make sure
your letter to them is factual and not emotional (calling them a bunch of
thieving scum won't help, even if it's true), keep copies of every
communication you send or receive and stick to your guns. Most of these
firms cave in and settle rather than be investigated by the FCA, which has
the power to put them out of business. Complain to the Insurance Ombudsman
if they are a UK based company (offshore insurers are often immune; see
above). Is it a fairly small sum you feel you've been cheated out of? Then
try your local small claims court. They are informal, fees are low and your
opponents can't claim huge legal costs against you even if you lose. Most
companies are tempted to settle before the hearing to avoid the expense of
defending a small case and the potential damage if the judgement goes
against them.

And finally ......

Staying with well established and respectable insurers may
cost a little bit more at first but it could prove a cheaper option in the
long run. Plus: what price can you put on peace of mind?